U.S. Steel warned Wednesday that thousands of union jobs would be at risk if its merger with Nippon Steel Corp. fails, and suggested it could close several steel mills and move its headquarters out of the politically sensitive state of Pennsylvania.
The announcement comes as Nippon Steel's plans to buy a U.S. steelmaker face growing bipartisan opposition, with Democratic Vice President Kamala Harris saying Monday she wants U.S. Steel to remain “American-owned and American-operated.”
Her Republican rival, Donald Trump, has promised to block the deal if elected.
Pennsylvania is a key state in the 2024 presidential election and has been visited multiple times by both candidates.
“We want elected leaders and other key decision makers to recognize the benefits of this transaction and the inevitable consequences if it fails,” U.S. Steel CEO David Barritt said in a statement.
Burritt said U.S. Steel is counting on $3 billion in investment from Japan to survive as part of the nearly $15 billion acquisition.
Without an agreement, he said, “U.S. Steel would be forced to significantly pivot away from its blast furnace facilities, putting thousands of well-paid union jobs at risk and negatively impacting the many communities where its facilities are located.”
Shares of U.S. Steel rose more than 1% on Wednesday.
President Joe Biden opposed the steel sale in March, saying it was “essential” that U.S. Steel remain American-owned and operated.
Japan has pledged to appoint the committee on Wednesday. Once the sale is complete, it will affect the vast majority of Americans.
The company said U.S. Steel will be owned by New York-based Nippon Steel North America, which has “operated in the United States for more than 50 years.”
The United Steelworkers union also opposes the takeover bid.
Meanwhile, Mr Barritt praised the $15 billion deal and called the passionate opposition “puzzling and confusing”.
He said the sale would allow U.S. Steel to invest in its old steel mill in Gary, Ind., and its Mon Valley plant near Pittsburgh after the company was forced to cut investments over the past decade to conserve cash.
U.S. Steel was planning to hold a worker rally at its Pittsburgh plant on Wednesday to promote the deal, in its latest attempt to sway public opinion.
“Today's rally is to show our support for the Nippon Steel deal,” Barritt said in a statement. “We want our elected leaders and other key decision makers to recognize the benefits of the deal and the inevitable consequences if it fails.”
For months, the company has been trying to persuade stubborn officials, including Pennsylvania Gov. Josh Shapiro, Sens. Bob Casey and John Fetterman and labor union leaders.
The company has a total economic impact of $3.6 billion, supports 11,417 jobs and generates $138.2 million in state and local taxes. According to the 2023 U.S. Steel Impact Study.
While U.S. Steel has been trying to persuade politicians, Nippon Steel has been pushing its proposal forward.
The Japanese company announced in late August that it would invest more than $2.7 billion in U.S. Steel's Gary and Mon Valley plants, nearly double its original proposed investment.
The company also pledged to refrain from laying off any hourly employees through 2026.
The American steel company, founded in 1901 by Gilded Age tycoons Andrew Carnegie and JP Morgan, has faced financial difficulties over the past decade due to rising steel costs and falling prices.
The company said that if the sale was blocked, it would be forced to close its Pittsburgh plant and move its headquarters south, saving it millions of dollars in Pennsylvania taxes.
Nippon Steel and U.S. Steel make most of their steel from molten iron cores. If the deal falls through, U.S. Steel would shift most of its production to a steel mill in Arkansas that melts scrap to make steel, Burritt told The Wall Street Journal.
Expanding the Arkansas plant would allow the company to close its Mon Valley plant in Pittsburgh, Barritt said.
“If the plant isn't going to last the next 10 years, why should we stay there?” he said.
U.S. Steel has operated in the Mon Valley area since 1901.
Nidec has said it would maintain its headquarters in Pittsburgh if the sale goes through.
